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  1. #11
    Advanced Member BIRMANBOY's Avatar
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    Yes but did you have fun doing it
    I believe most of the other previous studies of market analysts were done on major world indices, so its comforting to know that our analysts aren't any worse lol.
    Quote Originally Posted by BlackPeter View Post
    Just in case anybody is wondering why I didn't continue with this analysis for March ...

    Well, while it looks like so far that the analyst predictions are pretty random anyway ... no analyst I am aware of could predict this virus in March 2019, i.e. it would be pretty meaningless for the current bear / high volatility phase to check their one year old stock price forecasts against what really happened during this "black swan event".

    I might continue this analysis starting again in April 2021 (and comparing forecasts against April 2020 numbers).

    For what it is worth ... I looked so far into 20 companies (with forecasts made in January and February 2019) vs outcomes in January and February 2020.

    Instead of just using my (obviously quite arbitrary) pass / fail criteria as per the top post - here is a scatter graph showing the forecasted SP change vs the observed SP change.

    Attachment 11284

    As we can see: 20 consensus predictions, 5 of them too optimistic (forecasted consensus 10% or more above achieved SP), 4 of them "realistic (consensus matched target +/-10%), and 11 too pessimistic (target more than 10% above consensus).

    Slightly surprising, since we always seem to think that analysts are too optimistic, but they probably just didn't expect the last bull to run as far as it did.

    Whatever it is - based on above analysis it appears that throwing darts while being blindfolded might be an absolutely adequate method compared to using analyst consensus to determine where share prices for individual stocks will go.
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  2. #12
    always learning ... BlackPeter's Avatar
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    Quote Originally Posted by BIRMANBOY View Post
    Yes but did you have fun doing it
    I believe most of the other previous studies of market analysts were done on major world indices, so its comforting to know that our analysts aren't any worse lol.
    Well yes, I did - but I was as well genuinely interested in the result. And to be honest, while I didn't expected a strong correlation between analyst forecasts and outcomes, I still thought there might be some.

    But I guess the old saying (I think from Ben Graham) "nobody can predict stock prices" is clearly the most appropriate guidance to any SP forecast - be it by consensus or not.
    ----
    "Prediction is very difficult, especially about the future" (Niels Bohr)

  3. #13
    Legend peat's Avatar
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    Quote Originally Posted by BlackPeter View Post
    ... based on above analysis it appears that throwing darts while being blindfolded might be an absolutely adequate method compared to using analyst consensus to determine where share prices for individual stocks will go.
    it is incredible isn't it
    especially when one considers how much beef is created about stock selection
    and I thank you for your work though
    quite frankly
    it doesn't surprise me in the slightest.

    BUT, does it make you wanna go further with this notion of no one having a clue!? ? ?
    For clarity, nothing I say is advice....

  4. #14
    Advanced Member BIRMANBOY's Avatar
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    As long as share and stock analysts and firms stick to the brief of analysing previous results, histories and developing strategies suitable for clients they serve a useful purpose but as soon as they start trying to predict future movements, they should be reminded of the poor record humans have in the prediction dept.
    Quote Originally Posted by BlackPeter View Post
    Well yes, I did - but I was as well genuinely interested in the result. And to be honest, while I didn't expected a strong correlation between analyst forecasts and outcomes, I still thought there might be some.

    But I guess the old saying (I think from Ben Graham) "nobody can predict stock prices" is clearly the most appropriate guidance to any SP forecast - be it by consensus or not.
    www.dividendyield.co.nz
    Conservative Investing and dividend producers...get rich slowly!
    https://www.facebook.com/dividendyieldnz

  5. #15
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    "In past bubbles, not only has the growth of the inspirational stock or sector inevitably slowed, but these unique winners have proved to be just that … unique. The frenzied search for the “next …” ended in disappointment and large losses in 1969, 1973, 2000 and 2008. Is it really “different this time”?"
    https://www.livewiremarkets.com/wire...ing-narratives

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